Sharing ambiguous risks
Surajeet Chakravarty and
Journal of Mathematical Economics, 2015, vol. 56, issue C, 1-8
We analyse risk-sharing when individuals perceive ambiguity about future events. The main departure from previous work is that different individuals perceive ambiguity differently. We show that individuals fail to share risks for extreme events. This may provide an explanation why we do not observe individuals buying insurance for certain events like hurricanes or earthquakes and why many contracts contain an “act of God” clause, which allows non-performance if an unforeseen event occurs.
Keywords: Ambiguity; Risk-sharing; Choquet expected utility; Act of God (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: http://EconPapers.repec.org/RePEc:eee:mateco:v:56:y:2015:i:c:p:1-8
Access Statistics for this article
Journal of Mathematical Economics is currently edited by Atsushi (A.) Kajii
More articles in Journal of Mathematical Economics from Elsevier
Series data maintained by Dana Niculescu ().